Amazon Pay plans to sign up with govt bodies for bigger cut of payments

Amazon plans to sign up government institutions such as electricity boards and insurance companies to create use cases for Amazon Pay outside its online marketplace.Payal Ganguly | ET Bureau | May 29, 2017, 08:55 IST

US-based online retailer Amazon is looking to ramp up its payment play in the Indian market, as it plans to sign up government institutions such as electricity boards and insurance companies to create use cases for Amazon Pay outside its online marketplace.

Amazon Pay's launch on these platforms comes soon after it got a prepaid instrument (PPI), or a wallet licence from banking regulator Reserve Bank of India (RBI) last month.

It is currently in talks with state electricity boards and public insurance companies as well, said one source directly briefed on the matter.

Amazon India's slow but steady move into the payment space will see it take on other companies in the space such as China's Alipay-backed digital payments player Paytm, who is the market leader besides Flipkart's PhonePe and MobiKwik.

Amazon Pay plans to build a full stack payment play in India and tie-ups are aimed at increasing the use case, ubiquity and stickiness. For instance, customers who have saved their credit or debit cards on Amazon will also be able to use that to pay on third-party players that Amazon India ties up with besides using the wallet.

The company did not provide specifics on other players it plans to sign on to grow the wallet. “We are always testing ways to improve experience for our customers and these experiments are part of that,“ said an Amazon spokesperson in response to detailed email query sent by ET.

In a previous statement on receipt of the RBI payment licence, chief digital and data officer Sriraman Jagannathan had indicated that the wallet will bring on-board small value transactions to larger institutions and organisations including electricity payments, payment of insurance premiums, booking tickets on IRCTC, tie ups with state governments to pay for traffic challans and other use cases such as payment of fees to educational institutions.

“The adoption of digital payments is still attractive for new players in the wallet space. The global tie ups Amazon can bring in will enhance the retail experience and it will play out differently , as opposed to a consumer wallet. There is also a lot of scope in utilities payments, tolls, etc which will help the new wallet players grow the ecosystem,“ said Vivek Belgavi, partner, India fintech leader at consultancy firm PwC India.

The wallet is also directed at frequently transacting users and those from the tier-II locations and those on low-bandwidth networks to reduce friction in payments. The company has also invested recently in point-of-sale machines and technology infrastructure for accepting digital payments on delivery and enabling one-click transactions, said sources close to the developments.

In its current form, the wallet allows users to top up with up to Rs 20,000 without KYC and also runs cashbacks for transactions using the platform. Amazon Pay also works with some of the offline merchants including Cafe Coffee Day , Crocs and others to enable in-store payments through the wallet.

Amazon Pay, which is housed under Amazon Online Distribution, recently received an infusion of Rs 67 crore from its parent company.

Competing marketplace Flipkart has also been quite aggressive in pushing its users to transact on captive wallet partner PhonePe through incentivisation.